During the Next Financial Crises will the Federal Government Prime the Pump with Massive Spending?

If Past History is any Guide the Answer is YES!

DYI’s Expectation? 

MORE INFLATION!

The US, by controlling its own currency, cannot default on debt issued in its own currency because it can always “print” itself out of trouble (Fed buys some of the debt). But in an inflationary environment, printing money to service an out-of-control debt and deficit could cause inflation to spiral out of control, wreak havoc on the economy, and lead to years of wealth destruction and lower standards of living. Everyone knows this.

The far more palatable solution is to trim the annual deficit – including through tariffs – to where economic growth and modest inflation outrun the growth of the deficit, which would gradually over many years alleviate the problem. Whether or not this strategy can be pulled off smoothly remains in doubt.

Wolfstreet

 

COVID Was a Premeditated Hoax

People clearly knew in advance.

Dr. Wojak, M.D. Sep 3 2025 The COVID-19 pandemic was a sham on every level. It was also premeditated, with many signs of foreknowledge long before 2020—including early research, patents, pandemic simulations, predictions, whistleblowers, and more. Here’s the definitive list: 1960s Onward: Patents, Research, and Early Coronavirus Work 1990s Onward: Pandemic Simulations 2010: Rockefeller Foundation’s “Lock Step” Pandemic Scenario 2011: Contagion Foreshadows COVID 2015: Peter Daszak Foresees COVID 2015–2017: Bill Gates Predicts a Deadly Pandemic 2016: “SARS-like” Coronavirus “Poised for Human Emergence” Jan 2017: Fauci Predicts a “Surprise” Pandemic Feb 2017: Nature Article Highlights Wuhan Lab Risks May 2017: MARS Pandemic Simulation Sep 2017: WHO’s Budget Increases Oct 2017: SPARS Pandemic Simulation Feb 2018: WHO Issues Warning About “Disease X” May 2018: Clade X Pandemic Simulation Jan 2019: Training Leaders on Fear Aug 13, 2019: Crimson Contagion Pandemic Simulation Aug 2019: Australia’s Pandemic Playbook Sep 5, 2019: 4chan Whistleblower Sep 12, 2019: Global Vaccination Push Sep 18, 2019: WHO Pandemic Warning Sep 24, 2019: Trump’s Executive Order Oct 18, 2019: Event 201 Pandemic Simulation Oct 18, 2019: Military World Games in Wuhan Oct 29, 2019: Fauci’s Panel Remarks Pre-2020 Google Trends More Examples from Movies, TV, and Media *** 1960s Onward: Patents, Research, and Early Coronavirus Work Patent records stretching back to the 1960s show that the tools for a coronavirus pandemic were already on the shelf long before COVID. By the 1990s, spike-protein vaccines were on record; by the 2000s, labs in the U.S. and Wuhan were supposedly cloning and modifying coronaviruses. Yet during COVID, it was branded “novel”. 1990s Onward: Pandemic Simulations Since the 1990s, governments and health agencies have regularly run pandemic simulations with top-level participants—including senior government and military leaders, intelligence directors, public health heads, and prominent journalists. These exercises effectively rehearsed and sanctioned authoritarian tactics—things like mass lockdowns, enforced masking, coercive vaccinations, censorship, and surveillance—years before COVID, shaping the playbook that would later be implemented worldwide. Here are some of the earlier examples of pandemic simulations that laid the groundwork: 1999 – Johns Hopkins Smallpox Exercise: First large-scale simulation of a smallpox outbreak in the U.S. 2000 – Johns Hopkins Plague Exercise: Plague scenario tests coordination and emergency response. 2001 – Dark Winter: Smallpox exercise exposing U.S. vulnerability and civil liberty constraints. 2003 – Global Mercury: International simulation of a deadly viral outbreak. 2003-2005 – Atlantic Storm: Joint US and European exercise on bioterrorist attacks and mass casualties. 2005 – SCL Simulation: UK exercise preparing for pandemic influenza. 2010: Rockefeller Foundation’s “Lock Step” Pandemic Scenario Ten years before COVID, The Rockefeller Foundation published Scenarios for the Future of Technology. One of the scenarios, called “Lock Step”, described a pandemic that leads to: Authoritarian leadership Quarantines for all citizens Mandatory face masks and temperature checks 2011: Contagion Foreshadows COVID The 2011 Hollywood film Contagion mirrored the events of COVID almost point-for-point: Coronavirus from bats, in Asia, spreading through wet markets Viral videos alerting the West CDC & WHO leading while locals are sidelined and depicted as idiots Independent media dismissed as “dangerous” “Social distancing" and vaccine passports rolled out Many other films and TV shows contain striking parallels to COVID. I’ve included lots more examples at the end of this article. 2015: Peter Daszak Foresees COVID Five years before COVID, Peter Daszak, head of EcoHealth Alliance (which funneled U.S. government funds to the Wuhan Institute of Virology), admitted that media-driven hype would be key to pushing a future pan-coronavirus vaccine: “The economics follow the hype… investors will respond if they see profit.” 2015–2017: Bill Gates Predicts a Deadly Pandemic Bill Gates had been “predicting” a highly infectious virus may kill over 10 million people, years before COVID. That projection nearly matched exactly the official COVID death toll—even though most excess deaths came from lockdowns, hospital protocols, and vaccines, not a virus. 2016: “SARS-like” Coronavirus “Poised for Human Emergence” Four years before COVID, researchers identified WIV1-CoV (“Wuhan Institute of Virology virus 1”) as “poised for human emergence”. January 2017: Fauci Predicts a “Surprise” Pandemic Three years before COVID, Anthony Fauci confidently stated that there would be a “surprise outbreak” under the new Trump administration. “Surprise”—for who? February 2017: Nature Article Highlights Wuhan Lab Risks An article in Nature highlighted the Wuhan Institute of Virology’s risky bat coronavirus research three years before COVID. May 2017: MARS Pandemic Drill During the G20 Health Ministers’ meeting in Berlin, WHO and G20 officials staged a tabletop exercise on a novel respiratory pathogen called MARS (“Mountain Associated Respiratory Syndrome”). The scenario envisioned a fast-spreading, deadly outbreak and stressed global coordination, information control, and compliance. September 2017: WHO’s Budget Increases The World Health Organization conveniently boosted its budget for “outbreak and crisis response” in the years leading up to COVID.

 Bubbles are generated when investors drive valuations higher without simultaneously adjusting expectations for future returns lower.

In other words, the defining feature of a bubble is inconsistency between expected returns based on price behavior and expected returns based on valuations. The “Bubble Term” measures the gap between the two.

Unless the Bubble Term is able to grow exponentially larger forever – it shows up as a gap between the long-term return that investors expect in their heads, and the long-term return that investors can actually expect based on the future cash flows that will ultimately be delivered into their hands.

John P. Hussman, Ph.D.

Monthly Update: Little Changed from Prior Month!

 

Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 9/1/25

Active Allocation Bands (excluding cash) 0% to 50%

43% - Cash -Short Term Bond Index - VBIRX

35% -Gold- Global Capital Cycles Fund - VGPMX **

 22% -Lt. Bonds- Long Term Bond Index - VBLTX

 0% -Stocks- Total Stock Market Index - VTSAX

[See Disclaimer]

** Vanguard's Global Capital Cycles Fund maintains 25%+ in precious metal equities the remainder are domestic or international companies they believe will perform well during times of world wide stress or economic declines. 

Margin of Safety!

Central Concept of Investment for the purchase of Common Stocks.

"The danger to investors lies in concentrating their purchases in the upper levels of the market..."

Stocks compared to bonds:

Earnings Yield Coverage Ratio - [EYC Ratio]

Lump Sum any amount greater than yearly salary.

PE10  .........38.94
Bond Rate...5.37%

EYC Ratio = 1/PE10 x 100 x 1.1 / Bond Rate

2.00+ Stocks on the give-away-table!

1.75+ Safe for large lump sums & DCA

1.30+ Safe for DCA

1.29 or less: Mid-Point - Hold stocks and purchase bonds.

1.00 or less: Sell stocks - Purchase Bonds

0.50 or less:  Stock Market Crash Alert!  

Purchase 30 year Treasury Bonds! 

Current EYC Ratio: 0.53(rounded)

As of  9-1-25
Updated Monthly

PE10 as report by Multpl.com

Bond Rate is the rate as reported by

Vanguard Long-Term Investment-Grade Fund Investor Shares (VWESX)

DCA is Dollar Cost Averaging.

Lump Sum is any dollar amount greater than one year salary.

Over a ten-year period the typical excess of stock earnings power over bond interest may aggregate 4/3 of the price paid. This figure is sufficient to provide a very real margin of safety--which, under favorable conditions, will prevent or minimize a loss...If the purchases are made at the average level of the market over a span of years, the prices paid should carry with them assurance of an adequate margin of safety.  The danger to investors lies in concentrating their purchases in the upper levels of the market.....

Common Sense Investing:
The Papers of Benjamin Graham
Benjamin Graham

%
Stocks & Bonds

Allocation Formula

9-1-2025
Updated Monthly

% Allocation = 100 x (Current PE10 – Avg. PE10 / 4)  /  (Avg.PE10 x 2 – Avg. PE10 / 2)]

Formula's answer determines bond allocation.

Current PE10.....39.94

Avg. PE10...........17.27

Core Bond Allocation:  138% 

% Stock Allocation     0% (rounded)
% Bond Allocation  100% (rounded)

Current Asset: Vanguard Short-Term Investment Grade Bond Fund   

Logic behind this approach:

--As the stock market becomes more expensive, a conservative investor's stock allocation should go down. The rationale recognizes the reduced expected future returns for stocks, and the increasing risk. 

--The formula acknowledges the increased likelihood of the market falling from current levels based on historical valuation levels and regression to the mean, rather than from volatility. Many agree this is the key to value investing.  

Please note there is controversy regarding the divisor (Avg. PE10).  The average since 1881 as reported by Multpl.com is 16.70.  However, Larry Swedroe and others believe that using a revised Shiller P/E mean of 19.6 , the number since 1960 ( a 53-year period), reflects more modern accounting procedures.

DYI adheres to the long view where over time the legacy (prior 1959) values will be absorbed into the average.  Also it can be said with just as much vigor the last 25 years corporate America has been noted for accounting irregularities.  So....If you use the higher or lower number, or average them, you'll be within the guide posts of value.

Please note:  I changed the formula when the Shiller PE10 is trading at it's mean - stocks and bonds will be at 50% - 50% representing Ben Graham's Defensive investor starting point; only deviating from that norm as valuations rise or fall.

Current Allocation:

Vanguard Short Term Investment Grade Bond Fund

Possible Allocations to Bonds vs Stocks:

Bonds %

100%+  Vanguard Short Term Investment Grade Bond Fund 

99% to 65% Wellesley Income Fund

64% to 35% 1/2 Wellesley Income Fund - 1/2 Wellington Fund

34% to 20%  Equity Income Fund

19% to 0%  Vanguard Small-Cap Value Index Fund

  

DYI

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This site strives for the highest standards of accuracy; however ERRORS AND OMISSIONS ARE ACCEPTED!

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Use this site at your own risk.

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

The Formula.

A value based allocation strategy

February 19, 2010 by John Kingham